Thursday, 13 March 2008

On the Rising Sophistication of China's Exports

I am doing some work in this area. This new NBER paper appears to have some excellent data on product level trade between cities. One to add to the "to read" pile.

From the abstract I am not overly convinced by these results. It all depends on how the authors have attempted to measure sophistication.

What Accounts for the Rising Sophistication of China's Exports?

NBER Working Paper No. W13771

ZHI WANG, U.S. International Trade Commission
SHANG-JIN WEI, Columbia Business School, National Bureau of Economic Research (NBER), Centre for Economic Policy Research (CEPR), International Monetary Fund (IMF)

Chinese exports have become increasingly sophisticated. This has generated anxiety in developed countries as competitive pressure may increasingly be felt outside labor-intensive industries. Using product-level data on exports from different cities within China, this paper investigates the contributing factors to China's rising export sophistication. Somewhat surprisingly, neither processing trade nor foreign invested firms are found to play an important role in generating the increased overlap between China's export structure and that of high-income countries. Instead, improvement in human capital and government policies in the form of tax-favored high-tech zones appear to be the key to the country's evolving export structure. On the other hand, processing trade, foreign invested firms, and government-sponsored high-tech zones all have contributed significantly to raising the unit values of Chinese exports within a given product category.


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